Fast or Slow? Decision Making Styles in Small Family and Nonfamily Firms

The purpose of this study is to explore differences in the decision making styles between family and nonfamily firms, while assessing how family participation relates to the use of decision making styles in family firms. The empirical evidence is provided by a sample of 155 firms, located in the Autonomous Region of the Azores, Portugal, 82 family-controlled and 73 nonfamily-controlled firms. Results suggest that there are no differences in the use of rational decision making between family and nonfamily firms. However, nonfamily firms show higher levels of experiential decision making than family firms. Results also show that family participation plays a key role in guiding the decisional process, by promoting the use experiential decisions and inhibiting the adoption of a rational decision making style in family firms. From an applied perspective, assessing the influence of family participation in the adoption of a decisional style is potentially valuable for practitioners as well as for owners and managers. Providing them with clues that may help them better understand the basis of their decisions which can benefit their relations with other family members, as with customers, partners and suppliers that play a key role in the firm’s growth, profitability and adaptability. This study responds to a gap in the literature, by exploring the use of experiential versus rational decision making styles in small family and nonfamily firms. This study also contributes to the understanding of the decision making within family firms, by assessing the role of family participation in the decisional process.